Thanks for joining the discussion @Stakesaurus!
Currently, the curated list is managed with the help of the Lido Node Operators Sub-Governance Group (LNOSG) that evaluates current and new node operators and suggests the inclusion/exclusion lists to the DAO, the latter having the ultimate decision rights on whether to implement the recommendations.
So, if I get it right, what you suggest is basically:
- Adding more parties to the LNOSG.
- Adding stETH holders to the LNOSG.
- Allowing LNOSG to perform inclusion and exclusion without consent from the DAO.
I think 1) is worth pursuing in general, given that new parties possess the required expertise. For 3) to work for the curated set, the LNOSG should have significant skin in the game and be composed of a very wide range of actors to make attacks on the protocol and the network extremely expensive.
As for 2), i.e. giving stETH broad governance rights, in contrast to governance minimization and making foot voting as easy as possible, I think it’s a dangerous path currently because it gives outsized power to various agents holding stETH on behalf of others, e.g. bridges, L2s, CEXes/custodians, and, to some extent, DeFi protocols. Together they control a sizeable portion of stETH, which will only increase with time, and most of them are governed (sometimes by a multisig) and thus can act independently. The cumulative coordination cost for these large agents is significantly smaller than it is for regular stETH holders.
Setting a participation threshold might theoretically help but I’m afraid it won’t work in practice because, if you set it low, then few large agents will be able to coordinate protocol changes without participation from users, and if you set it high, users won’t be able to coordinate any change. I’m 100% sure that coordination between even 30% of the regular stETH holders is practically impossible, except when it’s required to save their ETH; at the same time, various agents already hold more than 30% of the stETH total supply.
In general, I believe in the end state where the protocol governance risk is minimized not because the governance process includes many parties but instead because the governance has no ability to sharply and significantly change the protocol and its covenants, controls the minimal set of meta-parameters of the protocol instead of micro-managing its operations, and because users can easily leave or fork the protocol if its governance becomes misaligned with them.
That said, I’m not against exploring the alternative class of solutions that keep the DAO in check by involving more parties; even the current DG proposal includes the negotiation mechanism between the DAO and the stETH holders that are intending to leave. Just trying to explain why the proposal currently relies on foot voting as the most efficient mechanism.
Btw, the current mechanism allows stETH holders to join veto escrow and thus trigger negotiation with the DAO even in the absence of a proposal. This allows them to demand removing a node operator from the set (for example, if it starts censoring) and leave the protocol if the DAO doesn’t cooperate.